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Thursday, April 4, 2013
Wednesday, April 3, 2013
Biggest Tax Time Mistake Is Not To File You Return
The temptation not to file a return is sometimes great. One may know that s/he owes taxes, but is faced with a situation in which the money to pay the taxes is simply not available. This common situation may leave one confused as to how to best proceed. Unfortunately, the option often selected is to not file the return at all. This is in fact exactly the wrong way to proceed.
You see, the IRS penalizes you TEN TIMES as much for not filing a return as it does for just failing to pay the taxes owing! Ten times. The penalty for failure to file a return is 5% of the amount you owe; if you file the return but can’t pay the tax, the penalty is 1/2 of 1%.
Now, that this little fact impact a bankruptcy? Well, if you are considering a bankruptcy filing your bankruptcy attorney and bankruptcy trustee will require a copy of your most recently filed tax return. Delay in filing a tax return can (and usually does) result in delay in obtaining a bankruptcy discharge and may case a dismissal of the bankruptcy altogether. Moreover, a bankruptcy may actually help address the unpaid taxes. For instance, a Chapter 13 case will give the taxpayer up to five years to pay off the taxes, usually with no interest or penalties.
So, file those tax returns – even if you do not not have all of the money to pay the taxes. If you have any questions and need help, call us to arrange a free consultation.
Considering Filing Bankruptcy? Maybe You’re A Popular Celebrity
In the mid 80′s to early 90′s, a television show, “Lifestyles of the Rich and Famous” was one fo the most popular television shows, with its host, Robin Leach. The show trumped the everyday American how the rich and famous lived - often on exotic vacations. The “Rich” and Celebrities are often admired, imitated and fawned over in our society. But when you look closely, at those individuals, they are not any different from the average person on the street. Just like the average person, celebrities often find it beneficial to file for bankruptcy relief. While the celebrity lifestyle may be quite different then yours or mine, financial distress has the same effect on everyone. And everyone is entitled to a fresh start, no matter how many parapazzi stalk them. Listed below are a few (but certainly not all) bankruptcies of film and television stars as well as a partial list of other celebrities who have filed for bankruptcy protection..
Film and Television Industry
Real Housewives of New Jersey: Terese and Joe Giudice, Danielle Staub, Chris Manzo (his company)
Real Housewives of New York: Sonja Morgan
Real Housewives of Orange County: Alexis and Jim Bellino, Simon Barney, Tammy Knickerbocker, Lynne and Frank Curtin
Real Housewives of Atlanta: Lisa Wu Hartwell
Real Housewives of Beverly Hills: Taylor and Russell Armstrong
Real Housewives of D.C.: Michaele and Tareq Salahi
Stephen Baldwin, one of the Baldwin brothers/acting family, featured in an article by Carmen Dellutri,.
Kim Basinger, who bought a town for $20 million right before she was sued for more than $8 million (breach of contract case)
Lorraine Bracco, who admitted when interviewed that bankruptcy is a humbling experience.
Tia Carrere, who was accused of filing bankruptcy to get out of her contract with ABC.
Gary Coleman, now deceased, but who was once the highest paid child actor in his era.
Francis Ford Coppola, who had many box office successes, also had failures that put his studio at risk.
Walt Disney, who created Mickey Mouse AFTER his bankruptcy and went on to fantastic success as explained by Rachel Foley, our Kansas attorney
Burt Reynolds, whose bad investments caused his financial distress.
Corey Haim, now deceased, filed for Chapter 11 bankruptcy. Haim was best known for his roles in Lost Boys and Lucas, both 80s films.
Don Johnson, another actor who rose to success in the 80s.
Margot Kidder, actress, whose illness amplified the financial turmoil in her life in the late 80s and early 90s.
Randy Quaid, another 80s star, who filed for bankruptcy in 2010s.
Debbie Reynolds, who liquidated some of her memorabilia during the bankruptcy process.
Famous for being Famous Celebrities
Nadya Shuleman (who ended up dismissing her bankruptcy as explained by our Georgia member, Jonathan Ginsberg)
Heidi Fleiss, aka the Hollywood Madam.
John Wayne Bobbitt, whose angry wife dismembered him, filed for bankruptcy, went on to become a adult film star.
Casey Anthony, who was found not guilty for the murder of her child while most of America believes that the wrong verdict was reached.
Anna Nicole Smith, whose real name was “Vicki Lynn Marshall”, rose to fame as the 1993 Playboy Bunny of the Year. In 1994, she married J. Howard Marshall, a wealthy 89 year old. In 1995, Marshall died.
Thursday, March 21, 2013
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Got your bankruptcy discharge?
Great! You’re on your way to a fresh start.
Now you’ve got work to do.
◊ List the debts that didn’t get discharged. Family support, recent taxes, student loans, or taxes for years for which you haven’t filed bankruptcy are not dischargeable in bankruptcy. The discharge order does not say which debts survive the process – or ask your attorney.
◊ Verify lien balances The discharge eliminates your personal liability for dischargeable debts; liens survive. If you plan to keep a house or car encumbered with liens, find out what you owe and resume payments. Otherwise, the creditor can enforce its lien by foreclosure or repossession.
◊ Rearrange banking Online banking and automatic bill pay may have been disabled while you were in bankruptcy.
◊ Set up automatic savings Bankruptcy probably brought home to you how little net worth you have and how thin the safety net is. Arrange for automatic savings for both an emergency fund and for retirement.
◊ Save your bankruptcy papers- You’re nearly certain to encounter efforts by buyers of zombie debts to collect debts that have been discharged in your case. You need to be able to show that the debt was scheduled in your case. Creditors with notice, and those they sell their worthless accounts to without notice, were discharged.
◊ Join a credit union Credit unions are owned by their members. They are in business to make loans to members. Rates are usually better than the banks, and the profits flow to members. About the only kinds of credit I’m enthusiastic about are car loans and home loans. Plan to be eligible to apply for a loan by joining now.
◊ Check insurance coverage If you elected to surrender property through the bankruptcy that still stands in your name, make sure that you are insured for liability. Liaibility insurance covers you for claims of anyone injured on your property. Electing to surrender property doesn’t take you off title til someone else goes on title. Don’t let post bankruptcy claims arising from property you’re trying to get rid of spoil your fresh start.
◊ Pull a credit report Several months after your discharge, check your credit report to make sure all discharged debts reflect a zero balance. The ugly history can properly remain, but you are entitled to a showing that you now owe nothing.
Take advantage of the opportunity that bankruptcy has provided, and go forth and prosper.
Now you’ve got work to do.
◊ List the debts that didn’t get discharged. Family support, recent taxes, student loans, or taxes for years for which you haven’t filed bankruptcy are not dischargeable in bankruptcy. The discharge order does not say which debts survive the process – or ask your attorney.
◊ Verify lien balances The discharge eliminates your personal liability for dischargeable debts; liens survive. If you plan to keep a house or car encumbered with liens, find out what you owe and resume payments. Otherwise, the creditor can enforce its lien by foreclosure or repossession.
◊ Rearrange banking Online banking and automatic bill pay may have been disabled while you were in bankruptcy.
◊ Set up automatic savings Bankruptcy probably brought home to you how little net worth you have and how thin the safety net is. Arrange for automatic savings for both an emergency fund and for retirement.
◊ Save your bankruptcy papers- You’re nearly certain to encounter efforts by buyers of zombie debts to collect debts that have been discharged in your case. You need to be able to show that the debt was scheduled in your case. Creditors with notice, and those they sell their worthless accounts to without notice, were discharged.
◊ Join a credit union Credit unions are owned by their members. They are in business to make loans to members. Rates are usually better than the banks, and the profits flow to members. About the only kinds of credit I’m enthusiastic about are car loans and home loans. Plan to be eligible to apply for a loan by joining now.
◊ Check insurance coverage If you elected to surrender property through the bankruptcy that still stands in your name, make sure that you are insured for liability. Liaibility insurance covers you for claims of anyone injured on your property. Electing to surrender property doesn’t take you off title til someone else goes on title. Don’t let post bankruptcy claims arising from property you’re trying to get rid of spoil your fresh start.
◊ Pull a credit report Several months after your discharge, check your credit report to make sure all discharged debts reflect a zero balance. The ugly history can properly remain, but you are entitled to a showing that you now owe nothing.
Take advantage of the opportunity that bankruptcy has provided, and go forth and prosper.
CAN THE IRS IGNORE A BANKRUPTCY?
The bankruptcy stay is the first major benefit for the debtor when a bankruptcy is commenced. Immediately after the filing fee is paid and a petition is filed, virtually every type of collection activity is called to a halt. An order is entered by the bankruptcy court under 11 USC Section 362 prohibiting nearly all creditors from taking any type of collection action. After months or even years of calls, letters and perhaps wage garnishment the automatic stay of the bankruptcy court is a welcome relief indeed. But does it stop everyone? Does it stop even the Internal Revenue Service?
While there are few exceptions to the protection a debtor in bankruptcy is given by the automatic stay, collection by the IRS is not among them. That is to say, even the IRS is prohibited from collecting after the petition has been filed. While the IRS can continue to audit tax returns during a bankruptcy proceeding, and may even determine that a tax is due, it cannot start or continue enforced collection. The IRS must stop any wage levy and if it files a tax lien after the bankruptcy petition has been filed, it must withdraw the lien.
What happens if the bankruptcy automatic stay is violated? Well, as a general principal, if a creditor violates the automatic stay by accident, it must return the money or stop the collection action as soon as it learns about the bankruptcy. However, if the stay violation is done willfully (ie., on purpose), then the creditor faces serious penalties as federal law provides strong remedies for the debtor. After a willful stay violation, the debtor can not only recover the money or property that was wrongfully taken, attorney fees and even punitive damages may be available.
The IRS instructs its collectors to stop all collection activities when they learn of a bankruptcy. In spite of these instructions, there are times when an overzealous tax collector violates the automatic stay on purpose. While some statutory remedies are available, the debtor cannot recover punitive damages against the government. Special rules apply and, based on 26 USC §7433 (d)(1) an aggrieved taxpayer in bankruptcy must first go through IRS administrative process to fix the problem. Treasury Regulation 301.7433-2(d)(1) sets out a procedure that must first be followed before any damages can be recovered from the IRS.
Despite the additional requirements of IRS regulations, the bankruptcy stay remains powerful protection from the tax collector. There are few other situations in which the debtor can tell the IRS to stop collections and count on the court to back them up. If you are being harassed by the IRS, call us today for a free consultation.
While there are few exceptions to the protection a debtor in bankruptcy is given by the automatic stay, collection by the IRS is not among them. That is to say, even the IRS is prohibited from collecting after the petition has been filed. While the IRS can continue to audit tax returns during a bankruptcy proceeding, and may even determine that a tax is due, it cannot start or continue enforced collection. The IRS must stop any wage levy and if it files a tax lien after the bankruptcy petition has been filed, it must withdraw the lien.
What happens if the bankruptcy automatic stay is violated? Well, as a general principal, if a creditor violates the automatic stay by accident, it must return the money or stop the collection action as soon as it learns about the bankruptcy. However, if the stay violation is done willfully (ie., on purpose), then the creditor faces serious penalties as federal law provides strong remedies for the debtor. After a willful stay violation, the debtor can not only recover the money or property that was wrongfully taken, attorney fees and even punitive damages may be available.
The IRS instructs its collectors to stop all collection activities when they learn of a bankruptcy. In spite of these instructions, there are times when an overzealous tax collector violates the automatic stay on purpose. While some statutory remedies are available, the debtor cannot recover punitive damages against the government. Special rules apply and, based on 26 USC §7433 (d)(1) an aggrieved taxpayer in bankruptcy must first go through IRS administrative process to fix the problem. Treasury Regulation 301.7433-2(d)(1) sets out a procedure that must first be followed before any damages can be recovered from the IRS.
Despite the additional requirements of IRS regulations, the bankruptcy stay remains powerful protection from the tax collector. There are few other situations in which the debtor can tell the IRS to stop collections and count on the court to back them up. If you are being harassed by the IRS, call us today for a free consultation.
Thursday, December 27, 2012
Can Bankruptcy Be A Part Of Wise Financial Planning?
In short, YES. There are basic commonalities that seem to flow through all financial planning advice – such as, live within your means and save for the future. The path to reach those goals, however, can be vary greatly depending upon who is giving the advice.
As a bankruptcy attorney who holds an MBA degree and who formally worked as a CPA, I spend many hours a week counseling clients on how to develop a household budget, foster proper spending habits, and develop realistic saving goals. In working with clients, I try to look at each situation broadly and realistically. More often than not, the main inhibitor to saving for the future is overbearing debt. Simply put, once a person sheds their debt, the individual/family will see an immediate increase in disposable income. Disposable income can then be put to work to build a stronger financial future.
So, why is bankruptcy not on the usual list of discussion topics of financial planners? Well, because these professionals are typically not attorneys and they are prohibited from giving legal advice. Further, they often lack a solid understanding of how bankruptcy can be used as a positive tool to move someone toward financial freedom. Lastly, for some, they simply have a financial incentive to steer people away from bankruptcy and into more costly and complex work-out solutions.
To be sure, bankruptcy is not a proper option for everyone. However, when used appropriately, bankruptcy is an inexpensive and effective tool in well-rounded financial planning. Consider that Donald Trump, Thomas Edison, Walt Disney, and Benjamin Franklin all filed personal bankruptcy. Where these individuals financially unsuccessful? Not by any measure. So, why should you (or anyone) be treated differently?
My focus as a bankruptcy attorney is to find the best solution(s) for my clients. In doing so, I will regularly consider many different legal and non-legal options, including non-bankruptcy options. I look at my role as a bankruptcy attorney to include putting the client on the right track once the case is over so that s/he will have a brighter financial future and be able to reach those long term goals of living within one’s means and saving for the future.
If you feel a bit overwhelmed by your debt, act now by giving us a call. We’ll have a frank and candid discussion of all your financial planning options. The sooner you act the sooner you can map out a plan to get yourself on track for a brighter financial future.
As a bankruptcy attorney who holds an MBA degree and who formally worked as a CPA, I spend many hours a week counseling clients on how to develop a household budget, foster proper spending habits, and develop realistic saving goals. In working with clients, I try to look at each situation broadly and realistically. More often than not, the main inhibitor to saving for the future is overbearing debt. Simply put, once a person sheds their debt, the individual/family will see an immediate increase in disposable income. Disposable income can then be put to work to build a stronger financial future.
So, why is bankruptcy not on the usual list of discussion topics of financial planners? Well, because these professionals are typically not attorneys and they are prohibited from giving legal advice. Further, they often lack a solid understanding of how bankruptcy can be used as a positive tool to move someone toward financial freedom. Lastly, for some, they simply have a financial incentive to steer people away from bankruptcy and into more costly and complex work-out solutions.
To be sure, bankruptcy is not a proper option for everyone. However, when used appropriately, bankruptcy is an inexpensive and effective tool in well-rounded financial planning. Consider that Donald Trump, Thomas Edison, Walt Disney, and Benjamin Franklin all filed personal bankruptcy. Where these individuals financially unsuccessful? Not by any measure. So, why should you (or anyone) be treated differently?
My focus as a bankruptcy attorney is to find the best solution(s) for my clients. In doing so, I will regularly consider many different legal and non-legal options, including non-bankruptcy options. I look at my role as a bankruptcy attorney to include putting the client on the right track once the case is over so that s/he will have a brighter financial future and be able to reach those long term goals of living within one’s means and saving for the future.
If you feel a bit overwhelmed by your debt, act now by giving us a call. We’ll have a frank and candid discussion of all your financial planning options. The sooner you act the sooner you can map out a plan to get yourself on track for a brighter financial future.
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